Ascend Wellness Holdings, Inc.

Good evening and thank you for standing by. I will now turn the call over to Ascend Wellness Holdings first speaker today, Dan Neville.

Welcome to AWH's second quarter 2023 earnings call. The presentation that accompanies this call can be found on the company's website, www.awholdings.com forward slash invest. Before we proceed, I would like to remind you that there are several risk factors and other cautionary statements contained in our SEC and CDAR filing, including our annual report on Form 10-K for the year ended December 31st, 2022. We will not review those risk factors and other cautionary statements on this call. However, we encourage you to read them carefully. Various remarks on this call concerning expectations, predictions, plans, and prospects constitute forward-looking statements or information. These forward-looking statements or information are subject to risks and uncertainties that may cause actual results to differ from historical or anticipated results. Any forward-looking statements or information reflect management's current view only. We undertake no obligation to revise or update such statements or make additional forward-looking statements in the future, except as required by applicable law. References may be made during this call to future-oriented financial information and financial outlooks, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as forward-looking statements or information. While we believe that such estimates have been prepared on a reasonable basis, reflecting best estimates and judgments, the actual financial results of the company may vary from the amounts discussed herein, and such variation may be material. During today's call, we will be referencing to non-GAAP measures such as adjusted gross profit, adjusted gross profit margin, adjusted EBITDA, and adjusted EBITDA margin as defined and reconciled in our earnings materials in the appendix of the presentation. These non-GAAP measures as defined by AWH may not be comparable to measures with similar titles used by other companies. Certain information that may be mentioned during this call, including industry information and estimates, is obtained from third-party sources, including public sources, and there can be no assurances as to the accuracy or completeness of such information. Although believed to be reliable, management has not independently verified any of the data from third-party sources. On today's call, we have Abner Curtin, Executive Chairman and Founder John Hartman, Chief Executive Officer, and Daniel Neville, Chief Financial Officer. I'd now like to hand the conference over to your first speaker today, Abner Curtin, Executive Chairman and Founder, starting on slide four.

Thanks. Good evening, everyone, and thank you for joining our second quarter 2023 earnings call. Thanks to the hard work and dedication of the Ascend team, we continued to make meaningful progress in Q2. We had yet another record sales quarter, achieving 123 million net revenue, representing 8% sequential and 26% year-over-year growth. We saw growth among almost all aspects of our business. Adjusted EBITDA was in line with expectations at 21.3 million, including our previously disclosed cultivation challenges in New Jersey. In a moment, John will update you on the improvements we are realizing in New Jersey. Absent the impact of these challenges, our adjusted EBITDA would have been $26.5 million, illustrating a core EBITDA generation capability of $106 million on an annualized run rate basis. I'm most excited to share that we generated $8 million in cash from operations and are approaching being free cash flow positive. This represents our second quarter in a row generating cash from operations. We remain confident in our ability to generate cash flow from operations for the full year 2023, and see the company move into a strong free cash flow position for 2024. These are both critical milestones for Ascend as we work towards becoming a self-financing company, and I am incredibly proud of the team for delivering these achievements. We are working to run the company so that we never have to rely on raising an outside dollar to support our growth objectives. We continue to see growth among all areas of our business, our retail outlet model leading the way. Based on the strength of the core business, we are increasingly comfortable with 2024 estimates, nearing $600 million of revenue and $125 million adjusted EBITDA with our existing asset base, although we are still in early days. John and Dan will provide more detail on the business segments momentarily. Valuations for cannabis operators remain hindered, with custody issues and federal illegality of the industry restricting most institutional investors from entering the space. However, we see green shoots of optimism that could potentially knock down these hurdles in the future. The possible catalysts for improving valuations that were mentioned in the last call are still relevant, starting with the potential for rescheduling of cannabis on the controlled substance list. While there is no definitive timeline on the conclusion of this review, the commentary out of the Department of Health and Human Services suggests that there is a possibility for the conclusion of this review by the end of the year. Further, the reintroduced Safe Banking Act continues to generate traction in the Senate. While we view a legislative path forward as a much longer-term possibility, we are pleased to see bipartisan sponsorship. Further, we continue to garner support for a lawsuit that challenges the constitutionality of the enforcement of the Controlled Substance Act against state-regulated cannabis businesses, which would invalidate the authority of the government to collect taxes under Section 280E of the IRS tax code. If successful, it would end the impact of 280E and gain access to capital markets and the banking system. By challenging illegality in the judicial system, we have a multi-pronged approach and pathways to a federal catalyst in each branch of the government. This is more shots on goal than the industry has had in the past and gives me optimism that one of these pathways will work eventually. Lastly, we are cognizant of our low stock price and the impact to investors, and the bar for transactions is very high. We recently saw one of our peers testing the market and uplisting for the TXX. We continue to watch the benefits they experience and are prepared to be fast followers in pursuing a path to uplisting if they achieve increased access to capital. I wanted to highlight our successful start of adult use in Maryland. We are pleased to be getting to sell to recreational customers at our four dispensaries in the state on July 1. We now sell adult use in five of our seven states and are excited about the potential for the remaining two states, Ohio and Pennsylvania, to flip to adult use in the near term. We believe that Ohio received enough signatures to put recreational cannabis on the ballot this coming November, and the ballot will be certified shortly. We are closely monitoring this development and remain optimistic about its success at the polls. Ascend is one of the strongest, most focused asset portfolios in the Midwest, Mid-Atlantic, and Northeast region. We look forward to driving revenue growth and cash generation across these assets in the upcoming quarters. With that, I'm pleased to turn the call over to John Hartman, our new Chief Executive Officer, to discuss his observations from his first 90 days as CEO and review the business in more detail. We brought on John to help us take the business to the next level. This development emphasizes our continued focus on operational improvements, and we will look to him to lead the company to operational excellence.